Tips to help startup businesses project expenses
It’s probably safe to say most entrepreneurs who start a business are thinking about the money they hope to make, and as for the bills they’ll have to pay … not so much. But spending money is the inevitable corollary to making money, and when you’re launching a business on a tight budget, it’s important to anticipate startup expenses as accurately as possible.
Projecting expenses will take some legwork, but it’s an activity that can pay off in significant savings and less stress. First, start off with a list of things that could reasonably be expected to cost you money in the first year of your new business, taking into account everything from Internet to a business electricity plan, inventory to advertising, salaries to rent. Bizfilings.com offers a great tool to help calculate the costs of running a new business.
Next, look into pricing in your area. For example, if you have to rent office space, what’s the going rate in your region? How much does advertising cost that could help you reach your target market? What do electricity providers charge for business electricity plans? It’s important to shop around for the best possible prices. A downloadable cash needs checklist for new businesses can help you organize anticipated expenses.
Now look at your projected expenses and consider where you might be able to save money before you even begin spending it. Can you launch with a lower stock of inventory? Can you save money on office rent by operating out of your home for several months or longer? Does your local electricity provider offer more than one business electricity plan to help you save money on utility costs?
Finally, use all the information you’ve gathered to establish an operating budget — it’s as vital to your success as your business plan. Going into your first year of business with a good idea of how much it will cost to operate can help ensure your new business does more earning than spending. To learn more visit txu.com/biz.